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The US Supreme Court does not have an easy decision, not least because the science is devilishly complex. Myriad Genetics holds patents on two human genes which – when mutated – are associated with breast cancer in women.

At the moment the company has a monopoly for testing mutations of these genes. The US court is set to decide whether such patents are legal.

If the Supreme Court decides against Myriad, then 30 years of patent laws relating to genetics will go out of the window – or maybe that is a bit extreme – but the court will certainly set a new precedent that will have profound implications for the genetics industry.

Those who support the continuation of such patents make a simple argument. “To advance our understanding and develop medical treatments, investment is required,” they say. And “what company will invest the required millions/billions without knowing its breakthroughs will be protected under patent law?”

Critics say that is crazy. How can you patent a gene? What next – a patent on exploiting the Sun?

The response from the likes of Myriad runs like this. For every new breakthrough in medical science, there were many ideas that came to nothing. Companies have to make enough money from their odd successes to fund all the failures. This is what critics of patents don’t understand, and this is why generic drugs are so unfair. But there is another point which often gets overlooked.

Innovations occur when researchers build upon the ideas of other researchers. The more researchers share ideas, the more they swap insights, the faster the rate of innovation. In today’s Internet world, thanks to the way innovations occur via building on the ideas of others, the rate of innovation should accelerate. This is not a new idea. Isaac Newton himself once said he innovated by standing on the shoulders of giants. It is just a more significant point in an era of such powerful communication technology. Patents may yet be the single biggest hurdle to innovation.

There is more than one reason why it may pay a company to invest in R&D without the incentive of patent protection. For one thing, first mover advantage can make big bucks for a company with or without patents. For another thing, companies which are at the forefront of innovation can sell their expertise.

Take IBM. Once again Big Blue is one of the largest firms in the world by market cap. These days one of IBM’s key strengths is its expertise in Linux. It has acquired this expertise by contributing to the innovation process, without obvious financial reward.

Companies that sit at the forefront of human knowledge work in complex areas. Such companies must have expertise, or they will not survive. Such expertise can only be effectively increased by ensuring the company’s researchers cooperate with other researchers. As a rule, researchers will only cooperate with other researchers if they feel that these other researchers bring something worthwhile.

Companies that do not have sophisticated R&D will be shut out from the cooperative process. The reason why the Linux community is happy to share ideas with IBM is because IBM reciprocates. Patents can destroy that cooperative process.

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